Which of the following is not a factor that makes valuing a target's stock difficult and imprecise?
A)It's hard for an acquirer to get an accurate forecast of the target's future cash flows.
B)Terminal values vary dramatically in response to small changes in assumptions.
C)The acquirer's management generally doesn't know anything about the target's line of business.
D)Estimating a risk adjusted discount rate for the analysis is inherently imprecise.

Question

Quizplus · Accepted Answer

The acquirer's management generally doesn't know anything about the target's line of business may make the acquisition more risky, but it doesn't necessarily make it difficult to value the target's stock. Factors such as uncertainty in future cash flows, variable terminal values, and imprecise risk-adjusted discount rates are all significant challenges to accurately valuing a target's stock.

Which of the Following Is Not a Factor That Makes